DHS contractsDHS reducing reliance on contractors

The Obama administration has sought to reduce the government’s dependence on contractors that the Bush administration relied upon so heavily during the formation of DHS; DHS has reviewed approximately 100 service contracts to see which should be assigned to an internal department rather than an outside vendor; the contract review project will serve as a template for future evaluations of all the department’s approximately 10,000 service contracts

DHS has reviewed approximately 100 service contracts to see which should be assigned to an internal department rather than an outside vendor. The primary goal of insourcing is to ensure that contractors are not doing inherently government tasks while considering the quality and cost of work, and whether using contractors put the department’s mission at risk.

Jeff Neal, DHS’s chief human capital officer, would not comment on how many jobs might be insourced as a result of the review which is still being scrutinized by the Office of Management and Budget.

The contract review project will serve as a template for future evaluations of all the department’s approximately 10,000 service contracts. DHS plans to use the process to study whether new missions should be outsourced, done in-house, or done with a mixture of contractors and federal employees.

The program’s implementation corresponds with the Obama administration’s order to slash federal contract spending by $40 billion by the end of FY 2011. Experts say other agencies will be following suit to find the proportion of contractors and feds that will let the government best accomplish its mission.

“Everybody’s doing it to some degree or another, but I don’t know if anyone’s done it as formally as DHS,” said Stan Soloway, president of the Professional Services Council. “They’re almost looking job-by-job.”

The Obama administration has sought to reduce the government’s dependence on contractors that the Bush administration relied upon so heavily during the formation of DHS.

In 2009, former Office of Management and Budget (OMB) director Peter Orszag ordered agencies to cut contract spending by insourcing government work and restoring the balance between federal and contract employees.

DHS components that are particularly contractor-heavy include the headquarters, Customs and Border Protection, and the Transportation Security Administration.

In 2009, the Defense Department announced plans to replace many of the 33,000 contractor positions with civilian workers and last year announced that 16,000 new Defense civilian jobs were created through insourcing. Defense Secretary Robert Gates said the insourcing had not yielded the savings expected while the Professional Services Council labeled the effort a “quota-drive exercise based on questionable cost assumptions.”

Stan Soloway, president of the Professional Services Council, said DHS’s balanced work-force effort is off to a better start than Defense. “I haven’t heard anything that suggests they’re doing a radical overhaul, but a strategic look,” Soloway said. “They really are looking to see if they have the right balance, the right skills and in the right place.”

Nine months ago, the Balanced Workforce Program Management Office was established by Jeff Neal to come up with a repeatable, data-driven process to review outsourced duties.

The department is looking at whether a particular mission is inherently governmental, whether the government, private sector, or a mix of the two can do it better or cheaper; if DHS has managers that can oversee the insourced work and whether the government has or can recruit people with the experience and skills to do something in-house.

“You have to work through budget cycles, you have to work with contracts and when contracts expire,” Neal said. “We certainly don’t have any intention to go out and terminate contracts midcycle. That costs too much money.”

Last week, Army Secretary John McHugh suspended ongoing insourcing actions and said senior Army leaders must review and approve all new insourcing proposals. McHugh also called for a tighter documentation and analysis of all possible alternatives to hiring federal employees to do the job.

“We have said all along that all sourcing decisions for clearly commercial work — whether insourcing or outsourcing — must be done strategically with the best interests of the government mission and American taxpayer in mind,” Soloway said. “Policies requiring decisions [to] be fully documented and justified and based on ‘an analysis of all potential alternatives’ should be adopted across DoD and other federal agencies.”